The announcement by Donald Trump’s new government to impose tariffs on a wide range of imported products has put markets on high alert. The roadmap even includes a 25% tariff on products from Canada and Mexico, which had previously been part of the USMCA alliance (the United States-Mexico-Canada Agreement), a cornerstone of the Biden administration’s trade policy. This decision is a significant blow to many companies that established factories in these two countries to supply the American market more efficiently, often even labeling their products as “Made in the USA” due to the continuous flow of raw materials and manufactured goods between the three nations.
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Chinese products will face a 60% tariff. The consequences of this turmoil have been swift. Volkswagen has sold its Chinese plant in Xinjiang, citing economic reasons. However, the company has also closed factories in Germany, resulting in tens of thousands of job losses.
Europe is not in a good position, as the German economic engine is out of sync, France’s debt is comparable to that of Greece, and now the new U.S. trade policy adds to the challenges.
Christine Lagarde, president of the European Central Bank, has urged Europe to purchase U.S. products, such as liquefied natural gas and defense equipment, aiming for greater and better cooperation with the new Trump administration. “Better to negotiate than to retaliate”, she said, in reference to a government threatening 20% tariffs. Lagarde also warned that a “general trade war” was “in no one’s interest” and would lead to a “global reduction in GDP”.
Trump’s victory has raised concerns among national governments and officials in Brussels, who fear that tariffs could wipe out the EU’s large trade surplus with the United States and encourage manufacturers to relocate production. In any case, Lagarde, echoing the stance of her predecessor Mario Draghi, emphasized that the EU needs to take drastic measures to regain its economic competitiveness.
If Chinese products can no longer enter the U.S. as they previously did, either directly or via Mexico, they will likely shift to other markets, such as Europe, dumping products at low prices. This flow of goods would increase pressure on the European market, especially at a time of economic weakness.
What I aim to explain is that we are witnessing a severe and decisive “rerouting” of massive volumes of cargo due to the implementation of all the aforementioned measures. At times, this involves relocating factories and production sites, which also affects the origins and destinations of raw materials. Other times, it involves redirecting products to new markets. A third reason lies in seeking alternative routes, moving products to third-party countries aligned with the new tariff policies, with the aim of reintroducing them into the same consumption chains. These new stances on trade and international cooperation are triggering a global reset.
The global container fleet will be activated immediately to respond to this flow of goods. It must act quickly to assist exporters and address the movement of stock, which could become a problem for already saturated logistics hubs. The massive “rerouting” will shift traffic to new locations, to the detriment of others, and the entire weight of the supply chain will move accordingly.
Goldman Sachs analysts have already highlighted these developments and predict an increase in U.S. GDP, though not for the EU.
In response to these changes, shipping companies have begun to strengthen their alliances to remain competitive and ensure cargo capacity in light of the impending surge. These shifts will inevitably affect rates and service availability. The global supply chain is already preparing to avoid falling behind the future.
